JEFFREY S. SMALL, AS CLERK OF THE CIRCUIT COURT OF THE CITY OF FREDERICKSBURG, VIRGINIA, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED v. FEDERAL NATIONAL MORTGAGE ASSOCIATION, A/K/A FANNIE MAE, ET AL.
Record No. 130317
Supreme Court of Virginia
September 12, 2013
OPINION BY CHIEF JUSTICE CYNTHIA D. KINSER
UPON A QUESTION OF LAW CERTIFIED BY THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA
Thе United States District Court for the Eastern District of Virginia entered an order of certification requesting that this Court exercise jurisdiction pursuant to
- 1.) Under Virginia law, does a clerk of court possess statutory standing to initiate a lawsuit, in his official capacity, to enforce the real estate transfer tax on the recording of instruments?
- 2.) If a clerk of court does possess authority to bring suit in his official capacity as described in Certified Question No. 1, does Virginia law authorize him to do so as a class representative on behalf of all clerks of court throughout the Commonwealth?
Because the ministerial duties of a clerk of court do not extend to enforcing the state taxes at issue, we answer the first
RELEVANT FACTS AND PRIOR PROCEEDINGS1
Jeffrey S. Small, in his official capacity as clerk of the Circuit Court of the City of Fredericksburg, filed a putative class action in the United States District Court for the Eastern District of Virginia (the federal district court) against the Federal National Mortgage Association (Fаnnie Mae), and the Federal Home Loan Mortgage Corporation (Freddie Mac).2
Purporting to represent the class of all clerks of court in the Commonwealth, Small alleged that Fannie Mae and Freddie Mac had failed to pay the taxes imposed by
Small further alleged that Fannie Mae and Freddie Mac had improperly claimed exemption from paying the taxes as governmental entities. Small requested that the federal district court certify the class action and prayed for, among other things, a declaratory judgment holding that the defendants are not exempt governmental entities and are therefore required to pay the real estate transfer taxes when recording instruments.
Among other defenses, Fannie Mae and Freddie Mac asserted that Small lacked the authority as clerk of court to bring an enforcement action under
Clearly, a clerk of court is vested with the ministerial duty to assess and collect Virginia‘s recordation tax whenever he records a dеed. But, he is not explicitly authorized to initiate an enforcement action under Virginia law. . . . This Court has found no controlling authority interpreting the applicable statutes, one way or the other.
Pursuant to
ANALYSIS
The first certified question asks whether Small has “statutory standing.” Under federal law, the concept of statutory standing “applies only to legislatively-created causes of action and concerns whether a statute creating a private right of action authorizes a particular plaintiff to avail herself of that right of action.” CGM, LLC v. BellSouth Telecomm., Inc., 664 F.3d 46, 52 (4th Cir. 2011) (internal quotation marks omitted). “[T]he statutory standing inquiry” addresses “whether the plaintiff ‘is a member of the class given аuthority by a statute to bring suit.‘” Id. (quoting In re Mutual Funds Inv. Litig., 529 F.3d 207, 216 (4th Cir. 2008)). The inquiry at the heart of statutory standing is whether the legislature “has accorded this injured plaintiff the right to sue the defendant to redress his injury.” Graden v. Conexant Sys. Inc., 496 F.3d 291, 295 (3d Cir. 2007); see Steel Co. v. Citizens for a Better Env‘t, 523 U.S. 83, 97 n.2 (1998) (statutory standing deals with “whether this plaintiff has a
Although the term “statutory standing” does not appear in this Court‘s jurisprudence, the concept does. “The purpose of requiring standing is to make certain that a party who asserts a particular position has the legal right to do so and that his rights will be affected by the disposition of the case.” Goldman v. Landsidle, 262 Va. 364, 371, 552 S.E.2d 67, 71 (2001); see also Livingston v. Virginia Dep‘t of Transp., 284 Va. 140, 154, 726 S.E.2d 264, 272 (2012) (same). When a plaintiff files an action under a particular statute, as Small has done here, the standing inquiry does not turn simply on whether the plaintiff has “a personal stake in the outcome of the controversy,” Goldman, 262 Va. at 371, 552 S.E.2d at 71, or whether the plaintiff‘s “rights will be affected by the disposition of the case.” Livingston, 284 Va. at 154, 726 S.E.2d at 272 (quoting Westlake Props. v. Westlake Point Prop. Owners Ass‘n, 273 Va. 107, 120, 639 S.E.2d 257, 265 (2007)).
The Court‘s analysis in Concerned Taxpayers v. County of Brunswick, 249 Va. 320, 455 S.E.2d 712 (1995), is illustrative. There, the plaintiffs brought a suit to enforce provisions of the Virginia Public Procurement Act,
Small asserts statutory standing in his capacity as clerk of court. The position of clerk of court, among others, is created by
This Court has consistently characterized the duties of a clerk of court as “ministerial” in nature. Town of Falls Church v. Myers, 187 Va. 110, 119, 46 S.E.2d 31, 36 (1948); Harvey v. Chesapeake & Potomac Tel. Co., 198 Va. 213, 218, 93 S.E.2d 309, 313 (1956); see also Patrick v. Commonwealth, 115 Va. 933, 935-38, 78 S.E. 628, 629-30 (1913) (holding clerk of court acted outside scope of express statutory authority by drawing and plaсing more names on a venire facias than permitted by the applicable statute); Page v. Taylor, 16 Va. (2 Munf.) 492, 498-99 (1811) (holding clerk not liable for non-execution of a bond because his duties did not extend to taking the bond, a judicial act to be done in open court). By definition, ministerial acts are non-discretionary. See Black‘s Law Dictionary 28 (9th ed. 2009); Moreau v. Fuller, 276 Va. 127, 135, 661 S.E.2d 841, 845-46 (2008) (“A ministerial act is one which a person performs in a given state of facts and prescribed manner in obedience to the
According to Small, his authority to bring an action to enforce the collection of unpaid real estate transfer taxes derives from
As with all issues of statutory interpretation, we are bound by the plain language of the statutes at issue. Jenkins v. Mehra, 281 Va. 37, 47, 704 S.E.2d 577, 583 (2011). “[W]e examine a statute in its entirety, rаther than by isolating particular words or phrases.” Cummings v. Fulghum, 261 Va. 73, 77, 540 S.E.2d 494, 496 (2001). “It is a cardinal rule of construction that statutes dealing with a specific subject must be construed together in order to arrive at the object sought to be accomplished.” Alston v. Commonwealth, 274 Va. 759, 769, 652 S.E.2d 456, 462 (2007) (internal quotation marks omitted). In addition, “[o]ne of the basic principles of statutory construction is that where a statute creates a right and provides a remedy for the vindication of that right, then that remedy is exclusive unless the statute says otherwise.” School Bd. of the City of Norfolk v. Giannoutsos, 238 Va. 144, 147, 380 S.E.2d 647, 649 (1989); see First Am. Title Ins. Co. v. Western Sur. Co., 283 Va. 389, 397, 722 S.E.2d 637, 640 (2012) (holding that the Virginia Consumer Real Estate Protection Act‘s еxpress remedies for violations of the statute did not include a private cause of action against a surety and the surety bond).
Certain principles govern our review of the tax statutes at issue here. “Taxes can only be assessed, levied and collected in the manner prescribed by express statutory authority.” City of Richmond v. SunTrust Bank, 283 Va. 439, 442, 722 S.E.2d 268, 270 (2012) (internal quotation marks omitted). “‘[A]n executive officer who seeks to enforce a tax must always be able to put his finger upon the statute which confers such authority.‘” Id. (quoting Commonwealth v. P. Lorillard Co., 129 Va. 74, 82, 105 S.E. 683, 685 (1921)). The General Assembly alone “determin[es] what mаchinery shall be exercised in carrying out the provisions of a law authorizing the imposition of taxes.” P. Lorillard Co., 129 Va. at 81, 105 S.E. at 685. Taxing statutes are “construed most strongly against the government and are not to be extended beyond the clear import of the language used.” City of Lynchburg v. English Constr. Co., 277 Va. 574, 583, 675 S.E.2d 197, 201 (2009) (internal quotation marks omitted).
Pursuant to
The tax on every deed, deed of trust, contract or other instrument shall be
determined and collected by the clerk in whose office the instrument is first offered for recordation. The clerk may ascertain the consideration of the deed or of the instrument, the actual value of the property conveyed, and the qualification of the deed or instrument for any exemption claimed by inquiry, affidavit, declaration or other extrinsic evidence acceptable to the clerk.
Clerks of court collecting taxes imposed under
Small contends his authority to file the enforcement action arises from his affirmative duty, as clerk of court, to collect the real estate transfer taxes. See
The Department may assess and collect any tax imposed by this chapter[, i.e., Chapter 8,] which has remained uncollected for thirty days. The Department, prior to collecting such tax, shall give notice to the clerk of court in whose office the tax was to be collected. The Department may then proceed to assess and collect the unpaid tax in the same manner and by the same methods used for the collection of any state tax administered by the Department.
Any local tax collected hereunder in conjunction with the collection of a state tax by the Department shall be deposited into the state treasury. The Comptroller shall, by warrant drawn on the Treasurer of Virginia, remit to the proper city or county any amounts due to such city or county.
Moreover, the Department may assess and collect the unpaid taxes “in the same manner and by the same methods used for the collection of any state tax.”
[t]he payment of any state taxes . . . may . . . be enforced by action at law, suit in equity or by attachment in the same manner, to the same extent and with the same rights of appeal as now exist or may hereafter be provided by law for the enforcement of demands between individuals. . . . Such proceedings shall bе instituted and conducted in the name of the Commonwealth.
No provision in these or any other statutes expressly authorize clerks of court to utilize such enforcement mechanisms to collect unpaid real estate transfer taxes. See City of Richmond, 283 Va. at 442, 722 S.E.2d at 270 (“Taxes can only be assessed, levied, and collected in the manner prescribed by express statutory authority.“) (internal quotation marks omitted).
Nevertheless, Small contends that the taxes at issue here have a local character because the locality receives one-half of
The statutory enforcement mechanisms for state and local taxes also undercut Small‘s reliance on the word “collect[]” in
Reading the statutory concept of “collect” in its entire context, see Cummings, 261 Va. at 77, 540 S.E.2d at 496, we conclude that to “collect” the real estate transfer taxes is a purely ministerial act, as the federal district court noted. When an instrument is offered for recordation, the clerk of court “ascertain[s] the consideration of the deed or of the
In sum, Small fails to “put his finger upon the statute” which authorizes him to enforce the real estate transfer taxes. See City of Richmond, 283 Va. at 442, 722 S.E.2d at 270 (internal quotation marks omitted). To imply from the word “collect” the authority to file an enforcement proceeding would “extend[] [
The first certified question asks whether “a clerk of court possess[es] statutory standing to initiate a lawsuit, in his official capacity, to enforce the real estate transfer tax on the recording of instruments.” For the reasons stated, we answer that question in the negative. Because the second certified question is premised on the first question being answered affirmatively, we need not address the second certified question.
Certified question one answered in the negative.
JUSTICE McCLANAHAN, concurring in part and dissenting in part.
I agree with the majority‘s reasoning and conclusion with respect to a clerk of court‘s statutory authority to sue to collect alleged unpaid real estate transfer taxes. I disagree, however, with the majority deciding that a clerk also does not have statutory authority to file a declaratory judgment action
As the Court‘s opinion notes, “Small requested . . . among other things, a declaratory judgment holding that the defendants are not exempt governmental entities and are therefore required to рay the real estate transfer taxes when recording instruments.” Indeed, Small‘s complaint contained three counts: the first for defendants’ alleged violations of Virginia‘s statute imposing the real estate transfer taxes, the second for unjust enrichment on the same basis, and the third for a declaratory judgment “that the Defendants are not exempt from payment of transfer taxes under state and/or federal law.” In the prayer for relief, Small separately requested “[t]hat the Court enter judgment awarding the Plaintiff and the class damages equal to the transfer taxes not paid” and a “judgment declaring that the practice complained of herein is in violation of law and that Defendants are subject to payment of the transfer taxes and are not governmental entities or
In its discussion framing the certified question to this Court,2 the federal district court focused on the collection of taxes. Likewise, neither party argued to this Court whether a clerk is or is not statutorily authorized to sue for a declaratory judgment regarding a party‘s qualification for exemption from the transfer taxes.
The majority‘s position is that its opinion decides this unargued issue, because it believes that Small‘s declaratory judgment count seeks a ruling that the defendants were not exempt at the time the relevant deeds were recorded and that therefore the declaratory judgment count is a part of, not a separate claim from, Small‘s claims to collect the alleged unpaid taxes. Thus, the majority‘s analysis subsumes and decides the issue of whether Small has statutory standing to pursue declaratory relief.
Small‘s counts seeking to collect the alleged unpaid taxes and Small‘s count for a declaratory judgment ask a court to consider the defendants’ qualification for exemption; but their similarity ends there. The issue in the collection counts is
Since success on his collection counts requires Small to obtain a judgment that the defendants were not exempt in the past, the majority‘s position that Small‘s declaratory judgment count seeks the very same ruling rendеrs that claim superfluous.3 To the contrary, given the forward-looking nature of Small‘s declaratory judgment count, as well as the high frequency with which these defendants record instruments, the declaratory judgment count seeks a separate ruling regarding the defendants’
Moreover, while I agree with the Court‘s reasoning with respect to a clerk‘s authority to file a claim to collect alleged unpaid trаnsfer taxes, that reasoning hardly yields the majority‘s conclusion that a clerk does not have statutory standing to file a declaratory judgment action regarding a party‘s exemption status. The Court‘s opinion holds that a clerk‘s statutory duty to “collect” transfer taxes under
Despite Small‘s inability to obtain a decision regarding defendants’ exemption status through proving that they were not exempt in the past, he seeks resolution of this issue going forward through his declaratory judgment count. Of course, as a clerk of court Small must have statutory standing to pursue this form of action. Yet, this issue was not put before the Court, and the reasoning in the Court‘s opinion does not logically explain the majority‘s conclusion that a clerk is without such statutory authority. Consequently, it remains an open question whether a clerk is statutorily empowered to file a declaratory judgment action regarding qualification for exemption and, in turn, whether Small has statutory standing to litigate the declaratory judgment count of his present federal action.